(This article was published in the October 1999 issue of Labour Force, Australia (ABS Catalogue Number 6203.0))

LABOUR FORCE PROJECTIONS: 1999-2016

INTRODUCTION

This article presents projections of the Australian labour force to 2016. These projections show the outcome for the labour force of extrapolating historic trends in labour force participation rates into the future, and applying them to projections of the population. These projections are not forecasts, as they take no account of expected or likely changes in economic conditions or working patterns.

This article is based on the results of analysis presented in the recently released Labour Force Projections, Australia 1999-2016 (Cat. no. 6260.0). The publication presents projections of the labour force and of labour force participation rates by age and sex for the period 1999 to 2016.

OVERVIEW

A slowing of growth and an ageing profile are likely to characterise the Australian labour force over the period to 2016. Annual labour force growth is projected to slow to 0.4% per year by 2016, compared with average growth of 1.9% per year from 1979 to 1998. Despite this slower growth, over the period 1998 to 2016 the labour force could rise by 16% or 1.5 million, to 10.8 million.

LABOUR FORCE ESTIMATES AND PROJECTIONS

WHAT ARE LABOUR FORCE PROJECTIONS?

Projected estimates of labour force participation rates and of the labour force are the result of:

projecting trends in labour force participation rates for males and females by age group over the projection span, and

applying these projected participation rates to the most recent ABS population projections.

The technique aims to illustrate what future labour force outcomes might be realised if the assumed labour force and population trends eventuate. The results are neither predictions nor forecasts, as they merely extrapolate past trends, rather than assess possible future trends.

DEMOGRAPHIC TRENDS

Australia's population is ageing. One of the major causes of this is that people born in the baby boom (1947-61) will move into the older age groups (55 years and over). Due to the relatively low fertility of the 1970s, 80s and 90s there are relatively fewer people taking their place in younger age groups. In 1998, 21% of the population were aged 55 or over; by 2016, this is projected to increase to 29%. Increasing life expectancy will also contribute slightly to the ageing of the population.

There are similar numbers of people entering the labour force compared to the recent past, and there are no demographic forces likely to change this in the next 2 decades. However, with the ageing of the 'baby boomers', there is likely to be significant growth in the number of people leaving the labour force.

LABOUR FORCE AGEING

With Australia's population ageing, the labour force will also age. More than 80% of the projected growth in the labour force between 1998 and 2016 will be in the 45 years and over age group.

In 1998, 10% of the labour force were aged 55 and over, yet this age group is projected to account for nearly half of all the growth in the labour force. The 60-64 years age group will grow most rapidly, accounting for less than 3% of the labour force in 1998, but accounting for 15% of the total growth in the labour force between 1998 and 2016.

AGE STRUCTURE OF THE POPULATION AND THE LABOUR FORCE - 1998 AND 2016

While those aged 20-44 years made up 62% of the labour force in 1998, they are projected to contribute only 20% of the growth in the labour force between 1998 and 2016. Males in this age group represented 35% of the labour force in 1998, but are projected to contribute only 3% of the growth in the labour force (an additional 44,400 males) between 1998 and 2016.

By 2016, 15-19 year olds in the labour force are projected to have fallen by 1% (8,400 fewer than in 1998).

LABOUR FORCE 1998-2016: PROJECTED GAINS

GROWTH SLOWING

The labour force is projected to grow, on average, by 0.8% per year over the period 1998 to 2016, compared with average annual growth of 1.9% for the period 1979 to 1998. In the first nine years of the projection period, the labour force is projected to grow by 1 million, while in the second nine years it is projected to increase by half a million. The projected annual growth rate falls over the projection period, from 1.6% in 1998-99 to 0.4% in 2015-2016. The growth rate at the end of the projection period is expected to be very low by historical standards, and falling. Despite this slower growth, over the period 1998 to 2016 the labour force could rise by 16% or 1.5 million, to 10.8 million.

LABOUR FORCE AND POPULATION GROWTH: ANNUAL INCREASE

The male labour force is projected to increase by 631,700 to 5.9 million, an average annual growth rate of 0.6% between 1998 and 2016. The female labour force is projected to increase by 867,600 to 4.9 million, an average annual growth rate of 1.1% between 1998 and 2016. Women are projected to contribute 58% of growth in the labour force to the end of the projection period, rising from 43% of the total labour force now to 45% by 2016.

PARTICIPATION RATES

The overall labour force participation rate is projected to fall to 60.6%. This rate was last experienced in 1984. In 1990, the labour force participation rate peaked at 63.7%-the highest level since it has been measured. It is not projected to reach this level again during the projection period.

PARTICIPATION RATES ESTIMATES AND PROJECTIONS

Historically, females in the main child-bearing years (25-34) have had lower participation rates than women aged 20-24 or 35-44. During the 1980s and 90s, there was a trend towards mothers returning to work sooner after the birth of their children. This trend is assumed to continue, thereby increasing the participation rates of women aged 25-34 to rates similar to those in the surrounding age groups.

PARTICIPATION RATES - FEMALES

Women's participation in the labour force is projected to rise in every age group except those aged 15 to 19 and those aged 65 and over. Participation by women in age groups between 25 and 54 is projected to increase by between 6 and 7 percentage points over the period 1998 to 2016. The participation rates of females aged 55-59 are projected to increase the most-by 12 percentage points.

In contrast, labour force participation rates for men are projected to fall in every age group except for those aged 60 and over. The projected male participation rate is influenced heavily by the changing age structure of the population. The projected decline in the participation rate from 73% in 1998 to 67% in 2016 reflects the substantially higher proportion of the male population aged 65 and over, together with a substantial fall in the proportion of males aged 25-44 years.

PARTICIPATION RATES - MALES

Historically, male participation rates have displayed an inverted U shape, with participation rising steeply from age 15-24, remaining relatively stable from ages 25 to 54 and then declining sharply. This shape remains for the projection period.

A LIKELY FUTURE?

Changes in participation rates, and the components of population growth (birth and death rate and overseas migration levels) will have a relatively small impact on the future labour force.

The bulk of the labour force in 2016 will be made up of people who are currently alive and in Australia. The size and age distribution of the current Australian population is the most important factor in determining the size and age distribution of the labour force in 2016. As the population ages, population growth will slow.

While the likely slowing in labour force growth could be moderated by rises in immigration or labour force participation, any increase in these components is unlikely to be large enough to prevent slower growth in the labour force, compared with historical levels.

FURTHER INFORMATION

For more detailed results or information about the projection method, see Labour Force Projections, Australia 1999-2016 (Cat. no. 6260.0), or contact Tim Carlton (02) 6252 6128, or by email: tim.carlton@abs.gov.au

Unless otherwise noted, content on this website is licensed under a Creative Commons Attribution 2.5 Australia Licence together with any terms, conditions and exclusions as set out in the website Copyright notice. For permission to do anything beyond the scope of this licence and copyright terms contact us.